Johnston shares surge as DMGT plots i newspaper bid

(c) Sky News 2018: <a href="http://news.sky.com/story/johnston-shares-surge-as-dmgt-plots-i-newspaper-bid-11552333">Johnston shares surge as DMGT plots i newspaper bid</a>
 

Shares (Berlin: DI6.BE - news) in newspaper publisher Johnston Press (LSE: JPR.L - news) have risen sharply after it emerged that the owner of the Daily Mail was plotting to buy the i newspaper from it.

Johnston's stock was up 16% in Monday trading after the plans by the Daily Mail and General Trust (DMGT) were revealed by Sky News over the weekend.

It comes during a period of turbulence for UK publishers, with Johnston currently scrambling to raise cash from a full or partial takeover.

DMGT's proposed bid is at an early stage but is expected to be lodged ahead of a deadline in the coming weeks set by Johnston's advisers at investment bank Rothschild.

The i has been a rare success story in Britain's struggling newspaper market, which has been wrestling with an accelerating shift of readers onto digital platforms.

The title was launched in 2012 as a sister newspaper to The Independent's print edition and was bought by Johnston for £24m four years later.

It is profitable on a standalone basis, though its circulation in August of just over 244,000 copies was 10% lower than the previous year.

The i sits alongside The Scotsman as one of Johnston's flagship titles.

The publisher, which employs 2,000 people, also owns hundreds of local newspapers including the Yorkshire Post.

Sources over the weekend suggested that numerous parties had expressed an interest in tabling offers for parts of the business.

Last month, Johnston put itself up for sale as it seeks to navigate a £220m bond which is due for repayment next year.

A solvent takeover of the whole company, which is also saddled with a £40m pension deficit, is considered unlikely.

Any decision to sell the i by itself‎ could generate between £50m and £100m in proceeds for Johnston Press, much of which would be used to reduce its pension and bondholder obligations.

For DMGT, a purchase of the i would add a strongly performing brand to a consumer media arm which contains the Daily Mail, its Sunday sister newspaper and the Metro (Dusseldorf: 62M.DU - news) , as well as the successful Mail Online operation.

Its disparate portfolio of assets includes a large stake in Euromoney Institutional Investor, Gemscape, an energy information business, and an events and exhibitions division.

Responding to an enquiry from Sky News about its interest in the i, a DMGT spokesman said: "We review all publishing assets that come to market, especially those where we can potentially leverage the scale of our existing national and international media operations."

Sources close to DMGT ruled out its interest in any other substantial parts of Johnston Press, and said it had no intention of returning to the regional newspaper market.

A Johnston Press spokesman declined to comment on Saturday (Shenzhen: 002291.SZ - news) .